State ask to drop David School suit

Ralph B. DavisManaging Editor

August 7, 2012

PRESTONSBURG — Citing a new direction for the David School, he state Attorney General’s Office is seeking to drop its lawsuit against the school, in exchange for a permanent injunction barring the school’s founder from ever having anything to do with the school again.

The state filed suit against the school two months ago, seeking to liquidate and involuntarily dissolve the nonprofit corporation that owns the school, based on allegations of financial mismanagement.

The complaint alleges that school founder and director Danny Greene has presided over worsening conditions at the school, even as his own personal fortunes have risen.

The complaint noted that this year Greene ended the school lunch program and cancelled employee’s health insurance plans without informing them he was doing so. However, over the past 11 years, the school has contributed $18,000 a year, in addition to an initial lump-sum payment of $54,000, to Greene’s retirement account, as well as $14,000 for a $300,000 life insurance policy on Greene.

The document also alleged the David School Board of Directors — which the AG maintains has at most two members, including Greene — has not met regularly since 2009 and “has failed to provide oversight of the David School’s finances.”

“Upon information and belief, since February 2009, funds have been expended without oversight and accounting safeguards by the Board of Directors,” the complaint says.

In particular, the complaint alleged Greene was paid twice during two pay periods and that he negotiated a sale of property “in which there was a conflict of interest … and the transactions were grossly unfair to the David School.”

The result of the spending and lax oversight, the complaint maintains, has been disastrous for the David School’s finances.

“Plaintiff believes that defendant the David School is not able to pay its debts as they become due in the usual course of affairs,” the complaint says. “Plaintiff believes that such financial problems are a direct and proximate result of Mr. Greene’s unauthorized, self-dealing actions.”

Now, however, the state is seeking to drop the suit, saying that a newly-appointed board of directors “has established adequate accounting practices and oversight of the David School finances and is oversee the continued operations of the David School.”

But in exchange for dropping the suit, the state is asking for a permanent ban on Greene and former director Emma Kriz “from interfering with the business affairs of the David School Inc., and from being present in, on the grounds of, or otherwise in contact with the David School facility.”

The motion will be considered Monday morning by Circuit Judge Johnny Ray Harris.